Britvic merger with AG Barr unravels
Britvic, the soft drinks company, has slammed Britain’s antitrust watchdog after its proposed £1.4 billion tie-up with Scottish peer AG Barr unravelled.
The deal lapsed yesterday after being referred to the Competition Commission. It had already suffered two extensions after the Office of Fair Trading lengthened its inquiry.
“Here we are, two British companies trying to strengthen ourselves against a vast US corporation [Coca-Cola] and being thwarted by the OFT,” fumed Gerald Corbett, Britvic chairman.
Coca-Cola dominates the £9 billion British market for soft drinks. Its market share, at 28 per cent, is double that of Britvic and AG Barr combined.
Anti-trust authorities, however, are concerned about the potential for pricing advantage in specific brands – in this case AG Barr’s Irn-Bru fizzy drink and Britvic’s Tango – and geographies. Scotland is one of the few countries in the world where Coca-Cola is outsold by a local drink – Irn-Bru.
The deal had been under discussion for years but came closer to fruition following an approach from AG Barr in September. Details of the planned all-share merger were put to shareholders in November.
Paul Moody, chief executive – who has steered Britvic through a difficult period that included a costly recall of its Fruit Shoots drinks – stood down immediately. He had planned to retire when the deal went ahead.
Mr Moody is replaced by Simon Litherland, who ran the UK operation and before that the British business of Diageo, the beer and spirits group. Mr Litherland might have been out of a job had the deal proceeded.
Britvic is to review the details of the decision when they are released. “We are not going to let this deal go lightly,” said Mr Corbett. – Copyright The Financial Times Limited 2013